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in question for the second time in three years.

Dell acquired Quest Software Inc. in 2012 for $2.4 billion to gain important enterprise IT management tools to build out its software group, not to mention 100,000 customers. That same year, Dell acquired SonicWall Inc. for an undisclosed sum to get its network firewall and other enterprise security tech.

Both may get the boot, as Dell looks to free up some cash, and make room for EMC and VMware. Dell reportedly put Quest up for sale at $2 billion, along with SonicWall for another $2 billion, according to Reuters.

Quest offered Windows management and migration tools, identity and access management, and other technologies that complemented Dell's own software portfolio, along with some products that didn't seem to jibe.

For example, industry watchers wondered whether Quest vWorkspace desktop virtualization software would continue, given Dell's allegiance to VMware, Citrix and Microsoft. Dell's planned EMC-VMware acquisition revived those doubts, as Dell will have more of a vested interest in the success of VMware's desktop virtualization software.

What could come of a Dell Quest, SonicWall sale

Industry watchers aren't surprised by the potential sale, given the amount of Dell-Quest technology overlap -- and debt Dell is about to take on.

"Dell will be looking for many ways to pay down debt, and they probably want to hold off selling any stake in VMware as a very last resort, since VMware is generating a lot of value," said Dave Bartoletti, a principal analyst with Forrester Research Inc., in Cambridge, Mass.

If Quest is sold to an equity firm dedicated to growing IT infrastructure-management businesses, that's good for IT buyers, Bartoletti said.

"If it's just a private equity firm not interested in IT management, that's not great news for users," he said. "Dell spent money building a software business, and I'm not sure it's good for customers when anyone starts tearing down what was fairly recently combined."

Dell spent money building a software business, and I'm not sure it's good for customers when anyone starts tearing down what was fairly recently combined.
Dave Bartolettianalyst, Forrester Research

One technologist and former Quest employee who was with the company throughout the Dell acquisition said it's unclear what benefit Dell gained from Quest's technologies, especially given how briefly it has owned the company. It typically takes six months to a year to integrate acquired technologies, he said.

"It looks like they will turn into another NetIQ. Let's hope not," he said. "I think pulling apart Quest is what will happen, given the right -- or wrong -- investor gets it and pulls a Gordon Gekko."

KKR is a global investment firm that manages investments, including private equity, energy, infrastructure, real estate, credit strategies and hedge funds. Thoma Bravo and Vista Equity Partners are technology investors that have been involved with six of the 10 biggest leveraged enterprise-software buyouts since 2013, according to Bloomberg. Dell originally acquired SonicWall from Thoma Bravo.

Many activist investors and equity firms target the virtualization and management software to generate quick returns, as orchestration, management and analytics capabilities are increasingly baked into cloud services and sold as a subscription, according to Andrew Smith, an analyst with Technology Business Research Inc. (TBR), an IT analysis firm in Hampton, N.H.

"There is a definite possibility that potential buyers will re-evaluate Quest's core products, given ongoing declines across the traditional infrastructure-management space, and whether they believe the Quest portfolio can generate long-term benefits or should be offloaded as a short-term investment," Smith said.

A "shrink-to-grow" strategy is a trend among management and virtualization companies, with vendors such as Citrix cutting out noncore products to expand its bread-and-butter technologies. Separation from Dell may allow Quest to benefit from a similar strategy, and create an opportunity to integrate with a wider range of applications, platforms and operating systems outside of traditional markets, TBR's Smith said.

"Quest had one of the most robust sales and partner ecosystems of any of Dell's software acquisitions, so I would expect it to come out of any divestiture with a strong sales engine with which to drive new growth," he said.

Bridget Botelho is Senior News Director for TechTarget's Data Center and Virtualization Media Group and End User Computing Media Group. Contact her at bbotelho@techtarget.com or follow her on twitter: @BridgetBotelho.

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